Tuesday, June 25, 2013

One too many Cook's in the Kitchen (OK best I could do)

So Apples stock is tanking. My personal stock needs an aqualung. It seems that the WOW factor is leaving Apple, iPhones are no longer the saving grace, is Tim Cook going to be able to hang in?

It's clear that Tim Cook was Steve Job's personal recommendation for CEO, and there's no doubting Cooks ability to manage incredibly complicated supply chains and manufacturing, but is he the visionary CEO, pushing the company to the limit to innovate and provide products that we "might" need but "must" have?

Apple laptops are still far superior than anything else on the market. The OS system on Macs leave MIcrosoft faltering and trying to emulate, the design of the powerbooks and Mac Air is still breathtaking, the speed of the solid state laptops addictive. Apple always had the reputation for building amazing laptops and really accessible cool looking good desktops.  I think the new iMac is a beautiful thing, so is an iMac from ten years ago.  The company is faltering on it's iPhone.

Imagine being the company that completely changed the way we look at and use a telephone.  A sleek touch screen, that allowed you to keep your calendar, contacts, photos, music, weather, texts in one place, oh and you can make calls! It was revolutionary and everyone followed behind.  But now the edge has gone, the iPhone 5 a disappointment, and rumors are that iPhone 5S (please can we kill the stupid "S" thing), the same make up as the iPhone 5. Samsung have come out with a phone that is equal if not better than the iPhone 5, the Galaxy 4.  Friends of mine who have the Galaxy 4 love it and do not miss the iPhone 5.

Today Oppenheimer analyst Ittai Kidron downgraded Apple. The downgrade comes directly from falling iPhone sales. Apple has to do something and do it quickly to start building shareholder confidence. Growth of sales is bound to happen when everyone has a smart phone, it's being a victim of their own success, but now that HTC, Nokia, Samsung and Apple are all fighting it out, what will Apple do to squash the competition and WOW us all?

Getting back to Tim Cook.  Is he really the right guy to be steering the ship?  If not him then who?  Apple likes to promote from within, and apart from Jonny Ive, who certainly is mega talented but not CEO material, who else?  At the developer conference a couple of weeks ago, Craig Federighi certainly turned out to be the star on stage, but who knows what leadership chops he would have in the top position?  For now I think Tim Cook is safe simply because who else would you put in?  But people and the board might start looking soon at alternatives if nothing happens soon.

Monday, June 17, 2013

The business of the kids business...

A new report just came out from new cable channel Pivot, saying that 13% of 18-34 year olds who have broadband have cut the cord to pay TV providers, and rely on broadband content only.  The new “Millenial” generation is cutting the cord, PAY TV and cable as a whole is in trouble, and the area to really watch to see the future of this is kids.  If your kids are spending more time online than watching TV, then guess what they’re NOT going to do when they grow up and decide on the family entertainment budget…pay for cable.

There was a time many years ago when a producer could make millions of dollars producing kids programming. The kids networks were king, and even broadcast networks retained major Saturday morning audiences. The times though are a changing.

The formula used to be easy…produce a cartoon, sell it to a network, retain licensing rights, sell the IP rights to every licensing category known to god, repeat in as many countries as possible, and everyone gets rich. Just ask the master of this Hiam Saban, exactly how much money you can make off one IP.

Let’s look at the kids business today:

Kids TV Networks

Networks are losing audience to online, a recent 2013 Mintel report on Tweens and Teens shows Tweens aged 8-13 are spending more time online than watching TV, 53% say spending time on the computer is their favorite way of spending spare time.  The kids business is going the way the of the record industry, and needs to understand and adapt.  The networks seem to be completely adverse to the second screen mentality, and even less adept to make money this way. 

Yes Nickelodeon FINALLY has brought out an app, and if you can navigate though that app, has some content on it.  What it isn’t though, is Nickelodeon in a true streaming 2nd screen format.   I am very close to Nick, having been part of the launch team for it’s first international channel in 1993, Nick UK, and have witnessed a steady decline in the ratings over a number of years. The most important sales demo in my opinion in the kids business is kids 6-11, and I have tracked this rating for Nick over the past five years and seen a steady year on year drop in ratings.  What has led to this?  There used to be a time when a Nick program was identifiable. There was only one network that would do Ren & Stimpy, there’s only one home for Spongebob Squarepants. Now it seems that Nick is playing catch up to Disney Channel and trying to emulate their success and programming.  It’s interesting to note that they haven’t had a Spongebob sized hit since Herb Scannel left the network six years ago. In my opinion Nick has lost it’s identity with its audience. 

Cartoon Network
Again, I am close to this brand having worked for Tuner setting up international Cartoon Network shows around the world many years ago.  Online, Cartoon Network has a strong offering, mainly thanks to Paul Condoloroa who is an excellent executive. I suspect given more of a runway Cartoon could really forge ahead in this area.  Out of all the networks Cartoon Network has been a more proactive online player.  Programming wise on the network though I just don’t know what Cartoon is anymore, and what its audience is?  It used to be young boys, and they ruled this demo, but now, I give up. Is their programming animated or live action, and how can Cartoon be a live action offering? 

The amazing machine that is the Disney machine. Disney Channel used to be the “baby” channel, no Tween with any self respect would go near them, and then through executives like Adam Bonnett, they developed amazing Tween sit-coms, and now they own that market.  Disney is now cool, and their shows create stars.  The “machine” integrates an amazing cross platform promotion, from Radio Disney, to retail, you don’t launch a show on Disney, you launch a property.  That being said, for the independent producer it’s very still very hard to get a show on Disney.  They tend to develop their own within a community of approved producers, it’s hard to break in.  Digitally, the “Mouse House”, has had trouble getting traction.  From the failed Go.com to various online kids platforms, they seem to miss the mark.  Recently though there have been some light at the end of this tunnel, but I do not feel Disney are doing half of what they could online.

Network programming

By law, free to air networks have to provide three hours of educational and informative information a week.  This used to be served through their own Saturday morning blocks, and also used to be a cash cow.  As long as a show contained a supportive educational element, (Zack has a moral dilemma in Saved By the Bell, how will he deal with it?), it was counted as E/I content.  Now the ratings have fallen off, and networks farm out their three hour blocks to producers who try to sell advertising and licensing against the pitiful dwindling ratings. This just isn’t a business anymore.


The economics of making content suck.  To be a producer involves an enormous amount of masochism.  If you make a show for say $300,000 an episode, and if an average large network pays you $60,000 an episode, you have to sell five major territories to break even on your budget.  But reality is, most networks will not pay you $60,000, it’s more like $20-30,000, so you could be looking at ten major broadcasters.  That’s a hard sell.  If you do manage to sell to your broadcasters and break even against your budget, you have probably had to give up licensing rights, have no control over how many times they play the show, where they play the show, IF they play the show.  Home entertainment dollars are in the toilet, (still a market in pre-school but thanks to the iPad that’s declining).  Licensing if you have been able to retain it, have killed advances, (OK if you’re Spiderman that’s a different deal), and will not guarantee the levels of advertising against their product that they used to.  Shelf space at big box retailers like Walmart have declined whilst their expectation per foot of shelving has increased. 

Network economics.  If you’re audience is in decline, the advertiser will do two things.  First they will drop the effective CPM base against your inventory, second they will start to move advertising dollars over to where the audience is going; in the kids case, online.  Networks like Nickelodeon have desperately tried to maintain their bottom line by doing major licensing deals to online services like Netflix and Amazon.  Recently Netflix dropped their Viacom deal, showing the strength of their platform and the lack of strength they place against the Viacom programming.  Viacom has immediately shopped their deal to Amazon.  So let’s think about the logic, or as I ascertain, lack of logic for doing this. You network is in major rating decline and has been for a couple of years, you know the audience is going online, but instead of building your own online presence and capturing the audience under your own flag, you sell out to get dollars in quickly and help build someone else’s platform. They then turn around and leave you standing as a wallflower at the dance,  and move on, “thank you but I don’t need you anymore”, and in order to not show a huge hole in your bottom line you HAVE to do another deal.  What happens when Viacom programming has built up Amazon’s audience?  Do they drop Viacom as a dance partner and move on?

Online Economics

First of all, if you own a library of shows, is it worth doing a network deal hoping it will get a platform? A network deal would pay a small licensing fee for library content and tie your shows up for three years.  So let’s for example say you get $10,000 per episode, over three years that’s  $3,340 dollars a year.  Online, against a $20 pre roll CPM, that equates to 170,000 views.  On  a dedicated online platform with millions of Tweens and the right promotion, could you get say, 300,000 streams per month per episode?  If so you are looking at generating $6,000 in revenues per episode per month, or $72,000 a year, or $216,000 over the three year license period a network would take.  A 30% revenue share against that would be $64,800 per episode.  That is $54,800 better than the network deal, and you keep your rights.  Now of course this all depends on how many streams you get against your show, BUT, it seems like a better deal to me!  This is why I am going online for my next business.

If you make content for the web, you approach the production from a completely different perspective.  Long gone are the $300,000 per episode budgets.  Imagine your starting place being $30,000 per episode.  Return against that would be 1.5mm streams and then you’re in profit.  You own the content to license against in other territories and platforms, all of which is profit.  I successfully did this at KOL.  We made a number of cartoons, Princess Natasha being the most successful. We cleared a profit online, we sold the show to Cartoon Network, did a home DVD deal, and then licensed the IP to 22 separate licensees.  Profit, profit, profit.  This is why I am going online for my next business.

So where does this leave us?

The business is changing.  The dominance of networks has gone, kids cable channels are losing audience share year on year, kids spend more time on iPads and computers than they do sitting in front of TV’s and this will only increase.  Advertisers are growing their online commitment, according to Adweek, last year the Tween space accounted for $17 billion in US ad spend, a greater percentage of that money is going online every month, forget every year!

Networks are never going to get back into the kids world.  Cable channels have to adapt and rebuild their own programming brand, and totally re-think their online offering, or they will loose. But if you were me, and you were starting up a new business, aimed at Tweens, what platform would you go to?

Thursday, June 13, 2013

Tuesday, June 11, 2013

Print me - literally

First watch the video...

Click here to watch video

We have all seen cool robotics before.  The thing that makes this robot special is that it was printed from an open source file on a 3D printer.

Yes this is the extreme of 3D printing at the moment, but it's really quite amazing.  I am fascinated with 3D printing. For those of you who have not seen a 3D printer, here is the MakerBot:

It prints a thin layer of plastic, layer on top of layer, hollow or solid to make up an object.  You can change the type of plastic used, color and also nice biodegradable plastics made from either corn or, get this...milk!

You can scan objects, with one of these...

This allows you to scan an object then re-print it in plastic. 

You might think this is all a bit geeky and hobbyist at the moment, and to a certain degree you would be right, however this is going to change our lives in a major way.  Just as we buy music online, movies and TV shows online, products from Amazon and other e-retailers, we will buy files to print.  Imagine wanting to have that cool knife block for your new high end kitchen knives, but don't want to pay postage, and wait for it to be sent through the mail.  Just download the file, pay probably $5.00, and print it in whatever color you like. Change the decor of your kitchen, no worries, print a new one in a bright shiny new color and throw the other one away, (you printed it in bio plastic right?).  You buy printable 3D files and print things at home...it's a whole new economy.  

Want to get a new Buzz Lightyear for your kid, Disney should get into the business of selling toy files, ask daddy for it tonight before bed, wake up tomorrow and play with the toy! Break a piece on the toy, just reprint it.

The applications are immense, the ability to scale this type of printing into different materials amazing. Imagine in medicine if you broke a bone and needed a replacement.  You don't get a standard replacement of a bone, you get a complete replica of the bone you broke!

Printers cost anywhere from $600 to $3,000 at the moment, BUT like all technology, as it gets adopted, you will see prices plummet.  The question is...when should i get one?

Monday, June 10, 2013


Yes! It sort of restores my faith in Apple. Compared to how I felt on my previous post, might stick around on Apple BUT, Siri demo was a pile of trash, not exciting and you could tell from the audience reaction that it wasn't in any way interesting, light ripples of applause compared to thunderous applause for iOS7.  It's clear Apple needs Jonny Ive and he is the most important guy in that building. His video got a standing ovation, he didn't even set foot on the stage!  I need Apple to give me an iPhone I could covet, something that will get me back in a line outside the store, something to love, iPhone 5 blah! I quite like the Power Mac trash can.

Thursday, June 6, 2013

I might leave Apple

Yup that's me, the Apple fan boy.  I have been an avid user of Apple products for over 20 years, in fact, one of my first jobs out of college was running ad sales for a listings magazine, and I remember how our lives changed when the Apple Macintosh "I "arrived in our office.  It allowed us to type copy into a layout and save that to a disc, then take the disc down to the printer...it saved us days in putting the magazine to bed.

My first Apple computer was their first laptop the "Blackbird". I still have it today, it still works.  It wasn't sexy like Apple products are now, this was before Mr Ive and Co, but the OS beat the crap out of windows.

Through the years a succession of Apple computers, (I'm typing this on an Air), from desktop to laptop, 15", 17" and now 11".  Apple is a brand to fall in love with, a relationship mixed with flushed blood flow due to the sexy design, and practicality over OS and UI...so why am I thinking of leaving?

I have an iPhone 4S.  That might not seem particularly enormous news to you, but if you knew me well, you would realize that me not having an iPhone 5 is amazing. I was in line for the original iPhone, and every subsequent upgrade. I paid over the odds for the latest phone...it was always exciting, fun and WOW look what you can do now. Then the hype around the iPhone 4S.  Siri turned out to be a joke, (do you know anyone who uses it, do you use it?), it wasn't particularly fast, and the design was identical to the 4.  When the 5 came out, it looked like an oddly stretched 4, and had no feature that made me have to have it.

But why leave?

To be honest the only thing keeping me with Apple is the fact that my content is in their eco sphere. My contacts, music, movies, photos.  There never used to be a real competitor, a company that actually gave the iPhone a run for it's money...then Samsung came along.

Samsung has actually brought out a really cool phone, the Galaxy 4 that makes me for the first time really think about ditching the iPhone.  I will still use Apple computers as the OS still beats the crap out of Windows, but Apple have been failing in other major areas.  The iCloud is terrible, clunky, drops out and limited in use, for some reason the new re-design of iTunes confuses  the hell out of me, I can no longer iChat, I have to FaceTime but that doesn't synch with my moms Apple that is still on iChat, FaceTime drops all the time, iChat drops all the time, is it me or is something broken at Apple?

I own Apple stock.  I would love them to bring something revolutionary out to get that stock price back up, but my confidence is waining.  When was the last revolutionary product, the iPad, three years ago? Where is my Apple TV, (an actual TV not the box that keeps breaking), the Pebble killing wrist watch, a sexy new iPhone?

I might jump to Samsung...and if I'm thinking about doing that, with my love and 20 year relationship with this company, Apple is in real trouble. There's something rotten at Apple, some might say to the core.

Tuesday, June 4, 2013

The Future

People!  I have seen the future and it doesn't involve a combustion engine! Last week I had the distinct pleasure to drive in the Tesla S saloon car. Once you have driven this you will never want to drive another car again...I'm serious.  I am sure by now you have seen reviews, new stories, and maybe the fact that Consumer Reports gave it a 100% rating, something they had never given any car before.

I knew about the car, and had read the stories, but you just don't "get it" until you drive in one.

First of all, it's a beautiful saloon car.  Forget the electric stuff for the moment, it's an amazingly appointed & designed car.  The interior has a lot of room, mainly because there's no engine, gearbox or drive shaft.  The dash is all electronic, the seats are soft calfskin, lots of legroom, and enough room on the back seat to swing (albeit a very small), cat.  The outside styling is classy, it doesn't scream, "look at me I'm an electric car", but it does scream, "don't you wish your Maseratti looked like this". As you approach the car with your key fob in your pocket, (there's no key, just a fob), the handles in the door automatically pop out, then when you close the door they retract flush with the door.

Ok the electric stuff...

The car is never off.  By this I mean, the car has no engine to turn on, it sits there charged, and is always on, just put it in drive and go.  This also means that you can turn the AC on to cool the car or heat it from your smart phone.  The car sends Tesla continuous usage reports via the fitted cell, and the car learns from your driving and adapts to it.  The car is completely controlled from a 17" touch screen. This means that everything from entertainment, (streaming radio stations from anywhere in the world, a real potential Sirius killer), AC/Heat, car settings, diagnostics, seat preferences/personal profiles are all on this screen.  You can also search the web, email, etc. When you put the car in drive, because with a normal automatic car it would creep forward even if your foot wasn't on the accelerator, they have built a "creep" option so that the Tesla will also creep forward, and it's clever attention to detail like that, which really wins you over.  So, in drive, and off you go.  But I expected it to be somewhat sluggish....HA!  This thing throws you back into your seat and if you have the runway to do it, will accelerate so fast that your skin will ripple like an F16 fighter pilot on novocain!  It has amazing torque and speed.  Cleverly, to slow down just lift your foot off the accelerator and the friction of the electric motors winding down slow the car, whilst, charging the battery.  Yes the slowing down of the motor charges the batteries!  The windows on this car are coated with a special film that blocks UVA/B and keeps the interior cooler than normal glass, as I said, attention to small detail really wins you over with this car.

Charging.  How much was your last tank of gas...for me it was $80 to fill empty to full.  With a rapid charger, your Tesla will fully charge in a couple of hours. You can program the car to charge at a specified time, so... with electricity being at it's cheapest after midnight, you can charge your car for $1.00. That's not a typo, you can charge your car for $1.00, which by my basic math, is $79.00 cheaper than my last refill! The car has a range of approximately 250 miles and gives you a continual update on that rage depending on your driving style.  Some restaurants in LA actually have charging stations, so valet, plug in and return to a fully charged car.  Tesla are planing rapid charging stations all over the country by end of 2014.

It's not until you drive this car, see it, feel it for yourself do you get it. It's amazing and if you're a gas company it's very frightening. They have banned the sale of Tesla's in Texas. Not joking here, they have used an old law banning the sale  of any car without a dealership in Texas.  At the moment, the best way to buy your car is to build it online and order it that way, so no dealer, and apparently in Texas that's illegal.  It could have NOTHING to do with the gas companies could it! Tesla will prevail, this car will re-write the automobile industry, the beginning of the end of the combustion engine has arrived.  Next year Tesla bring out an SUV.  It looks beautiful, it will be beautiful and if my wife lets me, it will be mine!